4/9/21 Weekly Update

Summarizing the week that was in the business of healthcare

Apr 10, 2021

Welcome to The Donut Hole’s weekly summary. The news doesn’t stop. Lucky for you, we are here to help you take in the week that was in the business of healthcare.

Verizon latest tech giant to elbow into telehealth space with provider platform

And we have yet another player entering the telehealth space! This announcement is hardly groundbreaking and looks more like Verizon merely broadening the addressable market for BlueJeans, the video conferencing app it acquired last year. There is some potential for BlueJeans to gain market share for small practices given its usability (no need for app downloads, one click access) and variable, per-visit pricing model that better aligns with reimbursement workflows. The app also includes medical interpreter services for patients in more than 200 languages, including sign language.

Potential impact on you: This is yet another sign that virtual care will be here to stay in some form. The ideal use cases and reimbursement all remain TBD, but telehealth will not go back to pre-COVID utilization. In fact, Verizon’s own research found that 81% of healthcare organizations surveyed expect to see a greater investment in telehealth over the next two to three years. This is also another example of broader technology options for smaller practices and solo practitioners.

Better Therapeutics to Become Publicly Traded Prescription Digital Therapeutics Company

Here’s an announcement that combines frothy areas of the capital markets (SPACs) and digital health investing (digital therapeutics). Via the transaction, Better Therapeutics will become a publicly traded company, the first public company focused on developing prescription digital therapeutics (other public digital care companies like Dario Health and OnTrak sell to health plans and employers and do not require prescriptions). Better Therapeutics aims to leverage behavior-based therapy (CBT) to address the root causes of cardiometabolic diseases (investor deck here). It’s pipeline includes products for type 2 diabetes, hypertension, hyperlipidemia, and hypertriglyceridemia. The approach is similar to the ones Pear Therapeutics and Akili have taken for behavioral health disorders.

Potential impact on you: Better Therapeutics will be an interesting company to watch. The attempt to use software to replace traditional medications, particularly small-molecule pharmaceuticals, is a bold mission that could prove revolutionary for some patients (fewer concerns over side effects, no visits to the pharmacy, perhaps improved adherence). But digital therapeutics players still face the formidable barrier that is broad payor reimbursement and provider adoption. It is simply much easier for payors and providers to stick with treatment plans based on well understood traditional medications. That said, this space will continue to evolve and mature, and prescription digital therapeutics will likely be a component of care plans, especially for chronic diseases with a large behavioral component, at some point in the future. Perhaps some of you will help lead the charge and increase provider adoption of this novel treatment modality.

41 Oregon providers, payers commit to value-based payment initiative

A group of 41 healthcare stakeholders covering 71% of Oregon’s population signed a compact that aims to tie 70% of healthcare payments in the state to value by 2024. The efforts do not specify specific value-based models, so expect to see a mix of upside-only, upside-and-downside risk, and prospective payment models spread across the state. All efforts are aligned with the mission to support payment models that deliver flexible, patient-centered care and move away from a legacy volume-based, fee-for-service (FFS) model.

Potential impact on you: The compact is more evidence of the inevitable shift to value-based care across the U.S. Every state and specialty will move at different paces, but the trend is clear. FFS will not be the dominant payment model in the near future. That said, some value-based payment models closely resemble FFS and simply slightly adjust a small portion of reimbursements up or down based on certain quality metrics. We would argue that true care delivery innovation won’t occur until there is meaningful downside risk in prospective payment / capitation payment models, but any step that moves away from FFS should be encouraged in the short term.

Lawsuit: Like a “boa constrictor,” UnitedHealthcare squeezed anesthesia group out of competition

The knives are out! This is a fascinating look into the battle between payors and provider groups over coverage and reimbursement rates. The simple story is that U.S. Anesthesia Partners (USAP) is suing UnitedHealth in Texas and Colorado, alleging that the industry giant pushed USAP out-of-network and interfered with USAP’s relationships with other providers to boost its own profits. UnitedHealth counters that USAP, which is private equity-backed, priced themselves well above market and UnitedHealth is simply protecting their own clients by steering in-network providers to lower cost options for anesthesia services. We’ll have to see how this plays out in the courts.

Potential impact on you: For those of you looking to join specialist groups, like anesthesiology, this is a good reminder of the reimbursement battles you can expect, especially if your group’s services are priced at the high end of the market. Health systems, particularly those that enjoy local monopolies, are much better positioned to negotiate against plans. Another key takeaway is that your patients may face outrageous bills from out-of-network providers through no fault of their own. Stories like this one highlight the unfortunate realities of surprise billing, which is primarily driven by private equity-owned specialist groups and ambulance providers. Congress took an important step to limit the practice by recently signing the No Surprises Act, but the Act doesn’t go into effect until 2022 and doesn’t cover ground ambulances.

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